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The importance of unoccupied property insurance

Do you remember when you secured the mortgage for the property you are buying that the lender made it a condition that you maintained sufficient building insurance throughout the term of the mortgage?

You probably arranged the cover – and thought no more about it, except to renew it each year.

But if you leave your property temporarily unoccupied, that regular building insurance might be restricted or even lapse altogether, so not only leaving the property vulnerable to loss or damage but also put you in breach of the mortgage conditions you agreed.

How might such a state of affairs arise?

Variation to your current property insurance

Whether it is your own home, property you have bought to let or commercial premises in which you have invested, your insurance cover remains valid for as long as it is occupied on a more or less continuous basis.

But then you might leave it unoccupied for a month or more while you go on an extended holiday or build an extension, during a change-over of tenants if you are a landlord or investor in commercial property, or whilst the property in question is subject to probate.

In these, or several other instances when the property is left empty and unoccupied for longer than 30-60 consecutive days, however, insurers typically restrict the cover on the property and may even regard it as having lapsed altogether.

Why the variation

Insurers downgrade the cover for your property, or exclude it altogether, because of the greater risks and perils faced by an empty building compared to one that it occupied on a more or less continuous basis. Those increased risks are many and varied, but two might stand out in particular:

when there is no one on hand to spot the fault, a need for otherwise simple maintenance or repair might turn into a full-blown emergency (just think of a dripping tap, which gets steadily worse and ends up flooding the entire building); and

an empty property attracts all manner of unwanted attention, from the likes of burglars, squatters, vandals and arsonists – the British Institute of Facilities Management (BIFM), estimates that British property suffers some £500 million in damage through vandalism and arson every year.

Unoccupied property insurance

When your current property insurance is downgraded because the building is temporarily vacant, unoccupied property insurance steps in to fill the void.

As a standalone insurance policy, it may provide as much, or as little, cover as you choose – for the duration of the period you expect your property to be standing empty. You may need to check, however, that the level of cover you choose restores the undertaking you gave to your mortgage lender to keep the building adequately insured.

Unlike many other types of insurance, unoccupied property insurance may be purchased solely for the period you expect the premises to be empty. Rather than having to commit to a full 12 months, therefore, you may choose to arrange cover for just the number of months you expect it to be standing empty and unoccupied.